GRIM CONDITIONS AND MISERABLE WAGES GUIDE APPAREL …mhssn.igc.org/WRC - Ethipoioa North Star - Dec...

GRIM CONDITIONS AND MISERABLE WAGES GUIDE APPAREL BRANDS IN THEIR RACE TO THE BOTTOM

Contents

December 31, 2018

Primary research for this report was carried out by Snetsehay Assefa Tegegn and Maria Hengeveld. Secondary research, evidence analysis, and editing were contributed by Penelope Kyritsis, Jeremy Blasi, Jessica Champagne, and Scott Nova.

On the cover:Photograph by Jeroen van Loon.

Publication design by Megan Wells.

Worker Rights Consortium5 Thomas Circle NWWashington, DC 20005+1 202 387 4884fax 202 387 [email protected]

I. EXECUTIVE SUMMARY II. ECONOMIC AND POLITICAL CONTEXT A. THE EMERGENCE OF ETHIOPIA AS A HUB OF TEXTILE AND APPAREL PRODUCTION B. HUMAN RIGHTS AND LABOR RIGHTS ENVIRONMENT IN ETHIOPIAIII. METHODOLOGY IV. FINDINGS AND OBSERVATIONS A. FINDINGS ON WAGES B. FINDINGS BY FACTORY C. ADDITIONAL OBSERVATIONS RELATING TO OCCUPATIONAL HEALTH AND SAFETYV. BRAND RESPONSIBILITY FOR CORRECTIVE ACTIONVI. CONCLUSIONVII. TABLES AND FIGURES

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ETHIOPIA IS A NORTH STAR 1

Executive Summary

THE GROWTH OF ETHIOPIA’S GARMENT SECTOR MAKES INDEPENDENT LABOR

RIGHTS REPORTING ESSENTIAL

As global brands continue their relentless quest for low-cost production locations, Ethiopia is emerging as a coveted destination. This report presents the results of an investigation of the labor rights environment in Ethiopia’s growing textile and apparel export sector. The investigation included in-depth interviews with garment workers at four export factories producing for leading brands. It reveals wages that are lower, by a substantial margin, than those in any other significant exporting country and grim working conditions that bear little resemblance to the standards the brands claim to be upholding in their supply chains.

While still small in absolute terms, Ethiopia’s garment export industry is experiencing substantial growth, as Asia-based manufacturers have set up operations and Western brands like H&M, PVH, The Children’s Place, JCPenney, and KiK, have all begun sourcing from the country.¹ According to recent data reported by Ethiopia’s government, in the last half decade, the country’s textile and apparel industry has grown at an average annual rate of 51 percent, with more than 65 textile investment projects licensed for foreign investment in this time period.² According to Ethiopia’s Growth and Transformation Plan II (2016 – 2020) – the government’s plan for reaching lower-middle income status by 2025 – the country aims to create 174,000 jobs and generate US$779 million in export revenue from the textile and apparel sector by 2020,³ with a goal of eventually creating over 300,000 jobs.4 These specific goals seem unlikely to be met; as of October 2017, only about 40,000 workers were employed in the sector, and growth over the past two years has not kept pace with yearly targets.5 However, significant ongoing development projects and an influx of major Asian suppliers and Western brands just beginning to source from the country indicate that the sector is poised to grow substantially in coming years.

worker testimony, and publicly available import data.

“Ethiopia: The Next Hub for World Apparel Investment and Sourcing,” The Ethiopian Messenger, January – March 2018, p.11, https://issuu.com/ethiopian.messenger/docs/the_ethiopian_messenger_9

Growth and Transformation Plan II (2015/16-2019/20), Volume I, p. 106, https://www.workersrights.org/wp-content/uploads/2018/12/gtpii_

commits to boosting apparel exports,” Just-style, 13 December 2016, http://www.just-style.com/news/ethiopia-commits-to-boosting-apparel-exports_id129529.aspx

Henok Tibebu, “Ethiopia: Effecient [sic] Textile, Garment Industries to Boost Exports,” All Africa, 9 December 2016, http://allafrica.com/

boosting apparel exports,” Just-style, 13 December 2016, http://www.just-style.com/news/ethiopia-commits-to-boosting-apparel-exports_id129529.aspx

“Ethiopia: 40,000 Job Opportunities Created by Industrial Parks,” 2Merkato.com, 2 December 2017, http://www.2merkato.com/news/alerts/5313-ethiopia-40000-job-opportunities-created-by-industrial-parks

Given Ethiopia’s emerging importance as a sourcing platform, it is important for the international community to have accurate information concerning labor practices in garment factories. Yet while the growth of the sector has received increasing media attention, published research on labor conditions, particularly research involving interviews with garment workers, has been scant.

investigation is to help fill this gap and to test the reality for garment workers against the labor standards of the brands that are driving the growth of the Ethiopian garment industry.

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BRANDS LIKE H&M AND PVH PROMISED HIGH LABOR STANDARDS

IN ETHIOPIAN GARMENT PLANTS

It is important to understand that all of the buyers sourcing from Ethiopia have committed, as a matter of both corporate policy and public promises, to protect the rights of workers in their factories. Each of these firms has a code of conduct that requires compliance with national law and other basic labor standards.6 As a member of the Fair Labor Association (FLA), PVH has also committed to uphold the FLA’s code of conduct.7 In addition, two of the factories covered in this report are certified by the

an industry-created factory certification initiative that was established in 2000.8 As part of this process, in addition to undergoing supposedly rigorous labor inspections, factory representatives are required to attest that they are “utilizing socially-compliant practices,” including compliance with national law.9

One important brand, PVH, has made expansive public claims of high ethical standards in its operations in

PVH, pledged in a speech at the inauguration of a major industrial park that PVH’s investment in Ethiopia’s garment and textile sector “will show the world there is no conflict between companies doing well and companies doing right by the people, the community, and the environment they operate within.”¹0 The corporation’s CEO, Emanuel Chirico, avers that PVH is “in a unique position to make positive impacts in the places around the world where we work and live” and that “one of those places is Ethiopia.”¹¹

See, H&M, “Code of Conduct,” http://sustainability.hm.com/content/dam/

en.pdf; Tchibo, “Code of Conduct,” https://www.tchibo-nachhaltigkeit.de/servlet/cb/1252988/data/-/TchiboCodeofConduct2016-2018.pdf; JCPenney, “Supplier Principles,” https://www.jcpenney.com/dotcom/images/Supplier_Principles082017.pdf; KiK, “KiK Textilien und Non- Food GmbH Code of Conduct,” http://www.kik-textilien.com/unternehmen/

; The Children’s Place, “Supplier Code of Conduct,” https://www.childrensplace.com/wcsstore/GlobalSAS/images/tcp/common/2014_TCP_Supplier_Code_of_Conduct.pdf; PVH, “Supplier Guidelines: Standards and Guidelines for Meeting PVH’s A Shared Commitment,” https://www.pvh.com/~/

ashx?la=en

pvh-corp

routinely criticized by researchers and labor rights advocates for its weak labor standards, its lack of transparency, and for prioritizing

is beyond the scope of this report; the following sources offer critical

pdfMilitary Exchanges Need to Address Unsafe and Illegal Conditions in Their Supplier Factories,” 2014,

pdfauditing is keeping workers in sweatshops,” 2005, https://cleanclothes.

; Maquila Solidarity Network, “Memo: Codes Update,” 2002, http://en.archive.maquilasolidarity.org/

http://www.wrapcompliance.org/en/

Park, June 2017, in Mamo Mihretu and Gabriela Llobet, “Looking Beyond the Horizon: A case study of PVH’s commitment to Ethiopia’s Hawassa Industrial Park,” World Bank Group, p. 38, http://documents.worldbank.

Excellence,” Business Wire, 12 September 2018, https://www.businesswire.

loan agreement with Wuxi in 2016.

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Our investigation also found the lowest wages the WRC has documented in any garment exporting country in recent years: wages as low as US$0.12 per hour, less than US$25 per month.

THE WRC FOUND SEVERE LABOR ABUSES AND WAGES AS

LOW AS 12 CENTS AN HOUR

H&M, two of the four for PVH. According to news reports, PVH is an investor of one of those facilities.12 Other buyers sourcing from at least one of these facilities include: Walmart, The Children’s Place, and Gerber Children’s Wear.

Executive Summary

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Despite the brands’ and retailers’ codes of conduct and certification schemes and the attendant public assurances about human rights in their supply chains provided by

Ethiopian garment factories uncovered numerous labor rights abuses. These include: draconian wage deductions, exacted as punishment for minor disciplinary infractions; degrading verbal abuse of workers by their supervisors; discrimination against pregnant workers; a high incidence of workers collapsing unconscious at their workstations, due to overwork and other factors; and forced overtime; among other violations of law and buyer codes. All of the abuses

and retailers’ own labor standards, violations they have apparently either failed to detect or chosen to ignore.

documented in any garment exporting country in recent years: wages as low as US$0.12 per hour, less than US$25 per month.¹3

investigated, exclusive of overtime hours, was US$0.18 an hour (US$38 per month).

The Ethiopian garment sector’s rapid growth has been fueled by these extraordinarily low labor costs. The Ethiopian Investment Commission, a government body charged with attracting foreign investment, has beckoned to potential investors with promises of “[c]heap and skilled labor” with

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These wages are possible, in part, because Ethiopia is unique among significant apparel exporting countries in the developing world in having no statutory minimum wage for workers in the private sector, including garment workers.¹5 Ultra-low wages, and the lack of any legal wage floor, have, unsurprisingly, been the source of significant worker unrest in the country’s garment sector, as well as in other industries.¹6

All conversions into US$ were calculated using the Oanda Currency Converter, https://www.oanda.com/currency/converter/

Ethiopian Investment Commission, “Invest in Ethiopia: Emerging Manufacturing Hub of Africa,” May 2016, http://www.comesaria.org/site/en/download.php?id_doc=153. Notably, with a recent increase in the garment worker minimum wage in Bangladesh, the ratio is now one to four.

As is further discussed below, additional factors explaining the sector’s rapid growth include large swathes of land suitable for cotton production, low energy-costs, favorable trade access to U.S. and E.U. markets, and

One researcher has noted that the wave of labor unrest in Ethiopia since 2017 – more than a dozen large-scale labor strikes have been documented in a number of industries, including the garment industry – is the largest

Samuel Andreas Admasie, “Amid political recalibrations: Strike wave hits Ethiopia,” 21, Journal of Labor and Society, 2018, https://onlinelibrary.wiley.com/doi/full/10.1111/wusa.12350

H&M Group, “Fair Living Wages,” http://about.hm.com/en/sustainability/sustainable-fashion/wages.html

Wage Indicator, “Living Wage Series: Ethiopia,” January 2018, https://wageindicator.org/salary/living-wage/ethiopia-living-wage-series-january-2018-country-overview

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It must be noted that many of the brands sourcing from Ethiopia, including H&M and PVH, have officially embraced “living wage” as the appropriate wage standard for workers in their global supply chains. On its corporate website, H&M states that “All textile workers have the right to a fair living wage,” and as a member of the Fair Labor Association, PVH has the obligation to take meaningful action to ensure that its suppliers are paying their workers a living wage (in FLA parlance, a “basic needs” wage).¹7 None of these brands have commented publicly on how their living wage commitments can be reconciled with their decision to expand sourcing in a country which has no minimum wage for garment workers and to use suppliers who pay wages as low as US$0.12 an hour and average wages of US$0.18 an hour (see Figure 2.a below). Wage Indicator’s Living Wage Series, which draws data from the International Labour Organization, the World Bank, and the Food and Agriculture Organization, estimates that a living wage in Ethiopia is between $US0.54 and $US0.93 per hour.18

exporters, producing for major global brands. They all have different owners, and they are located in several different parts of the country. It is reasonable to assume that the abusive conditions and extremely low wages identified at these factories are generally representative of conditions in Ethiopia’s garment industry as a whole.

The Ethiopian Investment Commission...has beckoned to

potential investors with promises of “[c]heap and skilled labor”

with wages that are “1/7 of China

Executive Summary


Executive Summary

It is important to consider the broader human rights environment in Ethiopia in order to understand the context that has helped to shape working conditions in the emerging garment sector. Over the past decade, Ethiopia has devolved into what the Global Democracy Index and Freedom House have labeled an “authoritarian” regime.¹9 Nominally a democracy but effectively a closed political system, the Ethiopian government is controlled by a single

three years, government security forces have responded with brutal violence to peaceful protests concerning issues of democracy and industrial development, killing more than 800 protestors and detaining tens of thousands. Scores of journalists have been threatened, arrested, and jailed, and at least a dozen news outlets have been shut down, prompting at least 60 journalists to go into exile.²0 In February 2018, the Ethiopian government declared – for the second time since October 2016 – a state of emergency, suspending civil liberties throughout the country for nearly a year.

minister, has taken significant steps towards greater openness and respect for human rights, including lifting the state of emergency on June 2, 2018 and announcing that Ethiopia’s 2020 election would be free.²¹ Problems remain months after the government lifted the state of emergency, thousands of people were arrested near the capital; many were then sent to military “rehabilitation camps,” as punishment for taking part in protests about ethnic violence in the country.²² The government also has left in place a law, discussed at greater length later in this report, that imposes debilitating restrictions on civil society organizations.

The negative implications of repressive political environments for the exercise of basic labor rights by apparel workers are clear. In an environment in which journalists, NGOs, and trade unions cannot operate freely, workers suffering labor abuses have few options to turn to for help.

HUMAN RIGHTS GROUPS SEE “MURDEROUS” VIOLENCE; BRANDS SEE “STABILITY”

In an environment in which journalists, NGOs, and trade unions cannot operate freely, workers suffering labor abuses have few options to turn to for help.

The Economist, “The Economist Intelligence Unit’s Democracy Index: 2018,” https://www.economist.com/graphic-detail/2018/01/31/democracy-continues-its-disturbing-retreat; Freedom House, “Freedom in the World: Ethiopia,” 2018, https://freedomhouse.org/report/freedom-world/2018/ethiopia

Amnesty International, “Ethiopia: After a year of protest, time to address grave human rights concerns,” 9 November 2016, https://www.amnesty.org/en/latest/news/2016/11/ethiopia-after-a-year-of-protests-time-to-address-grave-human-rights-concerns/; Human

2017, https://www.hrw.org/news/2017/06/02/addressing-pervasive-human-rights-crisis-ethiopia2018: Ethiopia,” https://www.hrw.org/world-report/2018/country-chapters/ethiopia

Aaron Maasho, “Ethiopia’s 2020 vote will be free, won’t be delayed https://www.reuters.com/

article/us-ethiopia-politics/ethiopias-2020-vote-will-be-free-wont-be-delayed-by-reforms-pm-idUSKCN1LA0O3

Hadra Ahmed and Joseph Goldstein, “Thousands Are Arrested in Ethiopia After Ethnic Violence,” The New York Times, 24 September 2018, https://www.nytimes.com/2018/09/24/world/africa/ethiopia-ethnic-violence-arrests.html

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The absence of effective democracy and the government’s authoritarian methods for controlling the populace do not appear to have been a deterrent for apparel brands, which established operations in Ethiopia well before recent reforms and which expanded those operations during a period (2016 and 2017) when political repression, including violence against protestors, was at its peak. H&M reports having conducted an extensive analysis of the human rights situation before entering the Ethiopian market23 and the country apparently passed muster, since H&M is now one

as to praise the Ethiopian regime, in June of 2017, with a repressive state of emergency still in place, as “an active and visionary government,” calling Ethiopia a “North Star.”24 On its corporate website, PVH, answering the self-posed question “So Why Ethiopia,” cited the country’s “stable government” as a principal factor; the company did not comment on the means the regime utilized to maintain this “stability.”25

in Ethiopia’s garment and textile sector “will show the world there is no conflict between companies doing well and companies doing right by the people, the community, and the environment they operate within.”²6

Ethiopia’s authoritarian political environment poses significant obstacles to independent labor rights investigation. It is very difficult for foreigners to gain government-approved access to Ethiopia for the purpose of human or labor rights research. If the goal is to research the garment sector, then the support of factory owners or brands is a prerequisite. Civil society organizations generally play a central role in effective labor rights inquiry, since such inquiries must necessarily involve interviews with workers that are conducted offsite, without the involvement or knowledge of factory managers. The

organizations that enjoy workers’ trust to assist in making contact with workers and arranging interviews. In the case of Ethiopia, independent civil society organizations concerned with human rights and labor rights are either not permitted to exist or are severely restricted in their operations.²7 The government’s penchant for arresting – and sometimes shooting – its critics also poses special risks in the context of labor rights investigation, making it imperative that workers who are interviewed can never be identified.

THE INVESTIGATION PROVED FEASIBLE DESPITE MAJOR CHALLENGES

TO INDEPENDENT LABOR INQUIRY Jaco Maritz, “Made in Ethiopia: Fashion retailer H&M looks to sub-Saharan Africa for suppliers,” How We Made It In Africa, 21 January 2014, https://www.howwemadeitinafrica.com/made-in-ethiopia-fashion-retailer-hm-looks-to-sub-saharan-africa-for-suppliers/34310/

June 2017 (In Mamo Mihretu and Gabriela Llobet, “Looking Beyond the Horizon: A case study of PVH’s commitment to Ethiopia’s Hawassa Industrial Park,” World Bank Group, p. 38, http://documents.worldbank.org/curated/

PVH, “Moving the Needle in Ethiopia: Building a ‘Best-in-Class’ Apparel https://

www.pvh.com/~/media/PVH/Files/corporate-responsibility/2015_cr_report.ashx. In August of 2016, the human rights group Freedom House had characterized the regime’s attacks on peaceful protestors as “murderous violence.” https://freedomhouse.org/article/ethiopia-security-forces-kill-dozens-protestors-block-social-media

June 2017 (In Mamo Mihretu and Gabriela Llobet, “Looking Beyond the Horizon: A case study of PVH’s commitment to Ethiopia’s Hawassa Industrial Park,” World Bank Group, p. 38, http://documents.worldbank.org/curated/

Civil society was drastically weakened in 2009, after the Ethiopian government passed a law barring organizations that receive more than 10 percent of their funds from foreign sources from operating in the country.

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These circumstances precluded physical inspection

investigated, and they posed obstacles to worker interviews, but it proved possible to overcome the latter. Thanks to the skill, courage, and perseverance of

with dozens of workers and conduct substantial fact gathering through detailed, offsite worker interviews, as well as review of relevant employment records. It is important to note that our purpose was not to conduct exhaustive code of conduct compliance assessments, but to identify significant labor rights violations workers have experienced and develop an accurate overall picture of labor practices in the sector.

WORKERS REPORTED GRIM CONDITIONS AT FACTORIES PRODUCING FOR PVH, H&M, WALMART, AND OTHERS

rights violations at all four of the subject factories, along with wages that, as noted above, are the lowest of any significant apparel exporter. All of the abusive practices identified violate buyers’ codes of conduct for suppliers; most also violate Ethiopian labor law.

Executive Summary


The table below indicates which categories of violation were identified at each facility. The four factories covered by this research are:²8

or in 2018 or in both years.

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Managers at all four factories routinely subject workers to verbal abuse, shouting at workers, calling them “stupid” or “worthless” or “trash,” and threatening to fire them. Pregnant employees at MAA are castigated as malingerers looking to avoid hard work.

JP has an openly acknowledged policy that the company will not hire women who are either pregnant or acknowledge an intention of becoming pregnant. Managers sometimes put their hands on the stomachs of new recruits to detect signs of pregnancy.

MAA’s managers have used their power, over matters such as granting promotions, to compel some women workers to provide sexual favors.

At all four factories, workers perform significant unpaid labor – either uncompensated overtime hours or off-the-clock work during breaks or before shifts.

Managers in all four factories exact grossly excessive wage deductions for minor disciplinary infractions, such as docking workers up to three days’ pay for such transgressions as drinking water at their workstations, speaking loudly, or arriving late to work. At three factories, the practice is standard but unofficial; at MAA it is codified as official policy.

Jay Jay, Arvind, and MAA ignore legal and code of conduct provisions banning forced overtime.

Workers at MAA and Arvind report that it is a common occurrence for a worker to collapse unconscious at her or his workstation, likely due to a combination of overwork, insufficient rest, and other factors. MAA’s response was to enact a work rule calling for anyone who faints to be fired and prohibiting any worker from coming to their aid.

Among the worst abuses:

Executive Summary

MAA Garment and Textiles, Kebire Enterprises Plc. (MAA)

Jay Jay Textiles Plc. (Jay Jay)

Arvind Lifestyle Apparel Manufacturing Plc. (Arvind)

JP Textile Ethiopia Plc. (JP)

located in the Bole Lemi Industrial Park, situated in the outskirts of Addis Ababa. The facility has produced goods for The Children’s Place (TCP), PVH, H&M, and Gerber Children’s Wear.

located in the Hawassa Industrial Park in the small southern town of Hawassa. JP Textile has produced for PVH, which has also loaned US$14 million to the factory.

located in the town of Mekelle in the northern Tigray province. The facility has produced goods for H&M, Walmart (and its subsidiary Asda), Bonghwa, MOC, Edwards, Obermeyer, DVH Apparel, and Trimark Sportswear.

located in the Bole Lemi Industrial Park. The facility has produced goods for Gerber Children’s Wear, The William Carter Company, The Children’s Place (TCP), and H&M.


Workers at all four factories are paid wages for regular work hours that are between US$0.12 and US$0.24 an hour (US$25 to US$50 per month). Across all four factories, the average is US$0.18 cents an hour (US$38 per month). These wages are not illegal since, as discussed above, Ethiopia has no minimum wage for garment workers. These are, however, the lowest wages by far that the

years. The workers interviewed consistently report that their earnings represent a small fraction of what they would need to support their families at a minimal level of dignity and security.

The primary moral defense offered for the low wages that characterize the global garment industry is that garment workers’ earnings, while very low, are considerably better than anything workers could hope to earn if they stayed in their home villages or if they tried their luck in the informal economy. Whether this argument actually constitutes a credible moral defense for paying people less than it costs to feed and house a family is a matter of opinion, but it is notable that wages in the Ethiopian garment sector are so low that the argument may not even be

the University of Chicago found in 2017 that 77 percent of Ethiopian garment workers quit their jobs within a year to return to agricultural or informal employment. The reason, the researchers explain, is that “people who worked in agriculture or market selling earned about as much money as they could have at the factory, often with fewer hours and better conditions.”29

Christopher Blattman and Stefan Dercon, “Everything We Knew About Sweatshops Was Wrong,” New York Times, 27 April 2017, https://www.nytimes.com/2017/04/27/opinion/do-sweatshops-lift-workers-out-of-poverty.html?smid=tw-share&_r=0

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More detailed information concerning the violations at each facility is presented in Section IV of this report.

The remainder of this report proceeds as follows: in the next section, we review the broader economic, political, and legal context underlying the growth of the Ethiopian garment industry and the shaping of factory conditions. We then discuss the methodology and sources of information utilized in this investigation. This is followed by a detailed presentation of the findings at each garment factory. We conclude with a discussion of the responsibility of H&M, PVH, Walmart, and other buyers to address the identified violations and with further observations.

Executive Summary

MAA

Leading Apparel Brands Sourcing from Factory H&M; Walmart

PVH; H&M; TCP; Gerber PVHH&M; TCP

Wage & Hour Violations

Punitive Wage Deductions Mandatory Overtime Unpaid Overtime Off-the-Clock Work No Employment Contract

Verbal Abuse Sexual Coercion Pregnancy Discrimination/ Harassment

Fainting from Overwork Restricted Access to Water/Restrooms Unclean Restrooms Contaminated Cafeteria Food

Harassment &Discrimination

Occupational Health & Safety

ARVIND JAY JAY JP

SUMMARY OF KEY LABOR VIOLATIONS BY FACTORY


Economic and Political Context

A. THE EMERGENCE OF ETHIOPIA AS A HUB OF TEXTILE AND APPAREL PRODUCTION

“Ethiopia: The Next Hub for World Apparel Investment and Sourcing,” The Ethiopian Messenger, January – March 2018, p.11, https://issuu.com/ethiopian.messenger/docs/the_ethiopian_messenger_9

Growth and Transformation Plan II (2015/16-2019/20), Volume I, p. 106, https://www.workersrights.org/wp-content/uploads/2018/12/gtpii_english_

boosting apparel exports,” Just-style, 13 December 2016, https://www.just-style.com/news/ethiopia-commits-to-boosting-apparel-exports_id129529.aspx

Henok Tibebu, “Ethiopia: Effecient [sic]Textile, Garment Industries to Boost Exports,” All Africa, 9 December 2016, http://allafrica.com/stories/201612090860.html13 December 2016, http://www.just-style.com/news/ethiopia-commits-to-boosting-apparel-exports_id129529.aspx

“Ethiopia: 40,000 Job Opportunities Created by Industrial Parks,” 2Merkato.com, 2 December 2017, http://www.2merkato.com/news/alerts/5313-ethiopia-40000-job-opportunities-created-by-industrial-parks

Mark Lane, “Mixed messages for Ethiopia textile market,” Apparel Insider, 4 June 2018, https://apparelinsider.com/mixed-messages-ethiopia-textile-market/

Ethiopian Investment Commission, “Invest in Ethiopia: Emerging Manufacturing Hub of Africa,” May 2016, http://www.comesaria.org/site/en/download.php?id_doc=153

PVH’s Form 10-K (https://www.pvh.com/investor-relations/sec-filings) indicates Wuxi is one of their finished goods inventory suppliers and that PVH entered a loan agreement with Wuxi in 2016.

“Can Ethiopia be Africa’s leading manufacturing hub?,” BBC News, 24 August 2017, http://www.bbc.com/news/world-africa-41035141

William Davison, “Park life: workers struggle to make ends meet at Ethiopia’s $250m industrial zone,” The Guardian, 5 December 2017, https://www.theguardian.com/global-development/2017/dec/05/ethiopia-industrial-park-government-investment-boost-economy-low-wages

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Ethiopia’s textile and apparel industry grew by 51 percent between 2011 and 2017, according to government data.³0 Per Ethiopia’s Growth and Transformation Plan II (2016 – 2020) – the government’s plan for reaching lower-middle income status by 2025 – the country aims to create 174,000 jobs and generate US$779 million in export revenue from the textile and apparel sector by 2020,³¹ with a goal of eventually creating over 300,000 jobs.³²

These specific goals seem unlikely to be met; as of October 2017, only about 40,000 workers were employed in the sector, and growth over the past several years has not kept pace with yearly targets.³³ Figures from March 2018 show that Ethiopia earned US$68.5 million in revenue from the export of textiles and garments over the previous eight months of the Ethiopian fiscal year beginning on July 8, 2017 – a 23.1 percent increase compared to revenue earned in the corresponding period in the previous year, but still 50 percent below the government’s target.³4

Still, major ongoing development projects and an influx of major Asian suppliers and Western brands just beginning to source from the country make clear that the sector is poised to grow substantially in coming years. Several factors help explain the industry’s rapid recent and expected growth.

First, as anticipated above, a major factor attracting investment is the availability of extremely low wage labor – a reality that the Ethiopian government does not refrain from marketing as an investment perk. The Ethiopian Investment Commission explicitly promotes the country as a source of cheap labor.35 Investors also openly acknowledge that the low cost of labor is a major factor driving their interest in Ethiopia. The general manager of Wuxi Jinmao,36 the Chinese firm that owns JP Textile, observed that “the production and labour cost is very low. This attracts our investment.”37 Wuxi opened JP Textile with financing from PVH.38

BACK TO TABLE OF CONTENTS

Second, Ethiopia has several additional comparative advantages that make it desirable as a sourcing platform. The country has swaths of uncultivated land suitable for local cotton and thus textile production, as well as relatively inexpensive electricity primarily through a network of hydroelectric dams. Ethiopia also has preferential trade access to U.S. markets through the African Growth and Opportunity Act, which was renewed for another 10 years in 2015 and allows for the duty-free import of apparel and textile products, as well as preferential access to European markets through bilateral agreements and participation in the “Everything But Arms” program, which grants duty and quota-free access to the E.U. market for certain less developed countries.³9

Third, anticipating and encouraging a major influx of investment, the government has aggressively sought to build up the textile and apparel sector. This has included offering firms in these industries generous incentives, such as favorable taxation and loan conditions for companies and expatriates and duty-free import of machinery. China is currently the country’s leading foreign direct investor – with US$10.7 billion in loans from 2010 to 201540 – and has enabled the Ethiopian government to invest heavily in improving logistics and production infrastructure. A land-locked country, Ethiopia is building Africa’s first electric railway system as part of investment in infrastructure to quicken the speed of delivery of finished goods from locations of assembly to the nearest port in the neighboring country of Djibouti.4¹ The railway is financed by the Ethiopian government and a US$2.49 billion loan from China’s Exim Bank.4²

On the private sector side, a case study by the World Bank Group on PVH’s decision to invest in Ethiopia largely attributes the emergence of the country as a textile hub to industry executives’ active search for the “new China.”4³ The study explains that “[h]igh-profile industrial incidents in several Asian countries involving violations of safety and labor standards, coupled with rising labor costs in China, has led companies to turn to Africa as a potential production location.”44


Economic & Political Context

See, Leonie Barrie, “TPP demise helps propel fabric mills to Ethiopia,” Just-style, 8 May 2017, http://www.just-style.com/analysis/tpp-demise-helps-propel-fabric-mills-to-ethiopia_id130632.aspx

Bill Donahue, “China Is Turning Into a Giant Fast-Fashion Factory”, Bloomberg Businessweek, 2 March 2018, https://www.bloomberg.com/news/features/2018-03-02/china-is-turning-ethiopia-into-a-giant-fast-fashion-factory

“Extensive development of industrial parks,” Ethiopian Investment Commission, http://www.investethiopia.gov.et/investment-opportunities/strategic-sectors/industry-zone-development

railway_id128996.aspx

October 2016, https://issuu.com/ethiopian.messenger/docs/magazine_4; Istvan Tarrosy and Zoltán, “China and Ethiopia, Part 2: The Addis Ababa–

https://thediplomat.com/2018/02/china-and-ethiopia-part-2-the-addis-ababa-djibouti-railway/

Mamo Mihretu and Gabriela Llobet, “Looking Beyond the Horizon: A case study of PVH’s commitment to Ethiopia’s Hawassa Industrial Park,” World Bank Group, p. 14, http://documents.worldbank.org/curated/

Id., p. 15.

Id., p. 19.

PVH, “Moving the Needle in Ethiopia: Building a ‘Best-in-Class’ Apparel

https://www.pvh.com/~/media/PVH/Files/corporate-responsibility/2015_cr_report.ashx

“Can Ethiopia Be Africa’s Leading Manufacturing Hub?,” BBC News, 24 August 2017, https://www.bbc.com/news/world-africa-41035141

39

40

41

42

43

4445

46

47

The case study previously referenced makes the point that, from a list of favorable factors for investing in Ethiopia – including labor and power cost advantages – the “key deciding factor was the clear commitment of the Ethiopian government to the textile and garment sector as a strategic area of investment.”45 And on a website describing its growing operations in Ethiopia, the brand PVH explains: “So why Ethiopia? It is Africa’s second most populous country, with an average GDP

government with an ambitious 2025 vision to become Africa’s leader in light manufacturing.”46 The BBC quoted the general manager of Chinese textile conglomerate Wuxi Group as follows: “Why did we choose Ethiopia? Firstly, it has a stable political situation and a peaceful society.” The same manager also cited low labor costs and large population.47



PVH, which self-identifies as a “supply chain pioneer,”48 has been at the forefront of the drive to build up Ethiopia’s garment sector as a leading investor in Hawassa Industrial Park and has claimed to be motivated by the goal of social uplift, not just the drive for profit. In September of 2018, PVH received an “Award for Corporate Excellence” from U.S. Secretary of State Mike Pompeo, in recognition of what the State Department views as PVH’s “sustainable” operations in Hawassa Industrial Park.49 Upon receiving this award, the PVH CEO said: “Today, we are seeing our vision come to life at the Hawassa Industrial Park. We have focused on protecting the local environment, using sustainable energy and ensuring sufficient supplies of clean water. Creating a safe and inclusive workplace is also a priority, which provides real opportunities for the residents of the surrounding area.”50 Other brands, including H&M and The Children’s Place, highlight development goals, like women’s empowerment and job creation, as having played an important role in their decision to move production to Ethiopia.5¹

The brands’ lofty claims are belied by actual working conditions, as documented in this report.

Bill Donahue, “China Is Turning Ethiopia Into a Giant Fast-Fashion Factory,” Bloomberg Businessweek, 2 March 2018, https://www.bloomberg.com/news/features/2018-03-02/china-is-turning-ethiopia-into-a-giant-fast-fashion-factory

Excellence,” BusinessWire, 12 September 2018, https://www.businesswire.com/

Id.

H&M, “4,000 New Jobs in Ethiopia,” https://about.hm.com/en/media/news/new-jobs-in-ethiopia.html; Lauren Shields and Margaux Yost, “How Ethiopia’s Nascent Apparel

https://www.bsr.org/en/our-insights/blog-view/how-ethiopia-apparel-industry-can-build-strong-empowered-workforce

Growth and Transformation Plan II (2015/16-2019/20), Volume I, p. 144.

Hannah Abdulla, “Ethiopia plans three more industrial parks to grow apparel production,” Just-style, 10 October 2018, https://www.just-style.com/news/ethiopia-plans-three-more-industrial-parks-to-grow-apparel-production_id134702.aspx

See, Ethiopia Construction, “Japanese Company to Develop Special Zone in Bole-Lemi II Industrial Park,” https://ethiopiaconstruction.com/news/japanese-company-to-develop-special-zone-in-bole-lemi-ii-industrial-park/

October 2017, https://www.enr.com/articles/43032-best-manufacturing---hawassa-industrial-park; Bill Donahue, “China is turning Into a Giant Fast-Fashion Factory,” Bloomberg Businessweek, 2 March 2018, https://www.bloomberg.com/news/features/2018-03-02/china-is-turning-ethiopia-into-a-giant-fast-fashion-factory

See, website of Ethiopia’s Industrial Park Development Corporation: http://www.ipdc.gov.et/index.php/en/resources-enapparel exports,” Just-style; 5 October 2016, http://www.just-style.com/news/ethiopia-inaugurates-africas-first-electric-railway_id128996.aspx; “Foreign companies are flowing to industry parks,” Addis Chamber of Commerce; Leonie Barrie, “How Ethiopia’s flagship textile and apparel park is taking shape,” Just-style, 5 May 2017, http://www.just-style.com/analysis/how-ethiopias-flagship-textile-and-apparel-park-is-taking-shape_id130616.aspx; Arthur Friedman, “Lifting of State of Emergency in Ethiopia Could Open Door for Sourcing,” Sourcing Journal, 9 August 2017, https://sourcingjournalonline.com/lifting-state-emergency-ethiopia-open-door-sourcing/

48

49

50

51

52

53

54

55

56

DEVELOPMENT OF NEW INDUSTRIAL ZONES

The most significant infrastructure-development efforts involve building major new industrial parks for the assembly of apparel and other products. The number of factories serving the apparel export industry was estimated to be less than 200 in 2017 but is expected to grow rapidly in coming years. According to government figures, 1,400 factory sheds were scheduled for construction between 2015 and 2019, with the development of new parks in Dire Dawa, Kombolcha, Mekelle, Bahir Dar, Jimma, and Addis Ababa.5

have announced the construction of three additional parks dedicated to garment and textile production in Ethiopia by the end of July 2019.5³

Our research focused primarily on factories in two of the most rapidly expanding zones. The Bole Lemi Industrial Zone, situated on the outskirts of the capital Addis Ababa, has been in operation since 2014 and houses two of the factories covered in this report (Arvind and Jay Jay). With 8,000 workers presently employed, the Addis Chamber of Commerce expects the Bole Lemi zone to eventually employ 35,000 workers across dozens of factory sites. If construction goes according to plan, a second Bole Lemi II zone, which is being developed with World Bank support, is expected to accommodate 60 new production facilities by the end of 2019.54

Our research also covered labor practices at a major facility in the Hawassa Industrial Park in the small southern town of Hawassa, an industry development which has been the subject of significant promotional and press attention – not least due to PVH’s leading investor role. The JP Textile plant is located in this zone. Stretched out over more than 1.3 million square meters, the Hawassa zone was built with the assistance of China to exclusively serve the textile and apparel industry.55 According to media reports, during 2017 the number of operational factory sheds in the zone increased from 32 to 57 and is expected to reach 172 facilities by 2019. The government expects the zone to eventually house as many has 60,000 workers.56


Most of the Hawassa-based factories are run by Asian multinationals, many of which supply major U.S. buyers at their facilities elsewhere. As noted above, the JP factory – reportedly the largest production facility in the zone – is operated by Wuxi Jinmao, whose factories in China, Bangladesh, and Vietnam supply PVH, Gap, JCPenney, Target, and VF Corporation. JP is the largest production facility in Hawassa.57 Wuxi reportedly hopes to use this and future manufacturing facilities in Hawassa to export US$60 million worth of garments annually by 2019, employing 2,500 – 3,000 workers.58


B. HUMAN RIGHTS AND LABOR RIGHTS ENVIRONMENT IN ETHIOPIA

Lack of Rule of Law and Respect for Human Rights

There have been important improvements recently in the country’s human rights situation.59 Within a few months of becoming prime minister, Abiy Ahmed has engaged in peaceful dialogue with Ethiopia’s longtime adversary, Eritrea; ordered the release of thousands of prisoners; allowed banned political organizations and their leaders to return from exile; and has opened access to hundreds of websites and TV channels that were previously blocked.

Despite these changes, the human rights environment in Ethiopia has been, and at this writing continues to be, of major concern to human rights organizations. Once considered a hybrid political system, Ethiopia has devolved into a closed political system in which the ruling

Beginning in November 2015, the government has responded with violence to peaceful protests, by members of the ethnic Amhara and Oromo groups, focused on issues of democracy and in some cases land disputes in areas where new industrial development projects

reported, “over 800 protesters have been killed, thousands of political activists, human rights defenders, journalists and protesters have been arrested.”60

The government of Ethiopia has declared a state of emergency, curtailing assembly and speech rights, twice in recent years. It did so first in October 2016, maintaining the edict for 10 months until August 2017. In February 2018, facing unrest following the release from detention of an opposition leader and score of political prisoners, the government once more declared a state of emergency,6¹ which was lifted by Abiy Ahmed two months early, on June 2, 2018.6²

Limitations on human rights advocacy impact respect for worker rights in apparel factories.

Leonie Barrie, “TPP demise helps propel fabric mills to Ethiopia,” Just-style, 8 May 2017, https://www.just-style.com/analysis/tpp-demise-helps-propel-fabric-mills-to-ethiopia_id130632.aspx

Id.

“Abiy Ahmed: Ethiopia’s prime minister,” BBC News, 14 September 2018, https://www.bbc.com/news/world-africa-43567007

news/2017/06/02/addressing-pervasive-human-rights-crisis-ethiopia

Paul Schemm, “Under a new state of emergency, Ethiopia is on the brink of crisis, again,” Washington Post, 3 March 2018, https://www.washingtonpost.com/world/africa/under-a-new-state-of-emergency-ethiopia-is-on-the-brink-of-crisis-again/2018/03/03/5a887156-1d8f-11e8-98f5-ceecfa8741b6_story.html?utm_term=.0b18dbcd6950

“Ethiopia cabinet drafts early end to state of emergency,” BBC News, 2 June 2018, https://www.bbc.com/news/world-africa-44344025

57

58

59

60

61

62

ETHIOPIA

ADDIS ABABA Bole Lemi Industrial Park

Hawassa Industrial Park


Unsurprisingly, the Global Democracy Index classifies Ethiopia’s government as an “authoritarian regime.”6³ In 2018, out of 180 countries ranked by the World Press Freedom Index, Ethiopia ranked 150th, down from 142nd in 2016. Scores of journalists have been threatened, arrested, and jailed in recent years, and at least a dozen news outlets have been shut down by the government. In December 2017, a Toronto-based research and development group revealed that over the prior two years, the Ethiopian government used spyware to target journalists, dissidents, and human rights defenders in at least 20 countries, including Canada, Germany, and Norway.64

Limitations on human rights advocacy impact respect for worker rights in apparel factories. Among other dynamics, in an environment in which journalists and NGOs cannot operate freely, the likelihood of abusive labor practices coming to light is greatly diminished, which significantly decreases the likelihood of public pressure that would drive improvements by factory owners and brands. Moreover, the repression of peaceful political protests has an inevitable chilling effect on workers’ willingness to speak out about poor conditions or otherwise seek to exercise their associational rights. Given this context, it is unsurprising that Ethiopia ranked Category 4, which translates to “Systematic violations of rights”, in the International Trade Union Confederation’s (ITUC) 2018

Workers.65

The influx of Western brands into Ethiopia at a time when leading human rights organizations were decrying violence against peaceful protestors and mass arrests of journalists, raises serious questions about the integrity of companies’ own human rights commitments.

The Economist, “The Economist Intelligence Unit’s Democracy Index: 2018.” https://www.economist.com/graphic-detail/2018/01/31/democracy-continues-its-disturbing-retreat

See, The Economist, “The Economist Intelligence Unit’s Democracy Index: 2018” https://www.economist.com/graphic-detail/2018/01/31/democracy-continues-its-disturbing-retreat; Freedom House, “Freedom in the World: Ethiopia,” 2018, https://freedomhouse.org/report/freedom-world/2018/ethiopiaWatch, “Journalism is Not a Crime,” 21 January 2015, https://www.hrw.org/report/2015/01/21/journalism-not-crime/violations-media-freedoms-ethiopia;

https://rsf.org/en/ranking

World’s Worst Countries for Workers,” 2018, p.10, https://www.ituc-csi.org/IMG/

Ethiopia Labour Proclamation No. 377/2003, Art. 4, https://www.ilo.org/dyn/travail/docs/247/proclamation

63

64

65

66

LACK OF A MINIMUM WAGE FOR PRIVATE SECTOR WORKERS

Ethiopia is among the poorest countries in the world. In 2016, the Human Development Index ranked the country 174 out of 188. With a population of 99.4 million and an unemployed rate of about 17 percent, brands doing business in Ethiopia have at their disposal a massive population of potential workers that is especially vulnerable to exploitation. As discussed above, Ethiopia’s apparel export factories pay workers the lowest wages in the global apparel industry.

Such low wages result in part from the fact that Ethiopia does not have a legal minimum wage for private sector workers. This dubious distinction sets the country apart from all other major apparel exporting countries in the developing world. Instead, Ethiopian workers’ wage rates are guaranteed, if at all, only by employment contracts.66 Given the fact that there is very little collective bargaining in the sector, employers can pay the lowest wage for which people are willing to work.

The lack of a minimum wage leads to adverse consequences for

workers beyond low base wages.



The lack of a minimum wage leads to adverse consequences for workers beyond low base wages. One function a statutory minimum wage typically plays in an employment law system is as a backstop to prevent excessive deductions from workers’ wages; in most labor regulation schemes, a deduction is unlawful if it results in workers earning less than the minimum wage. In Ethiopia, in the absence of such a wage floor, the apparel factory managers have attempted to take advantage of the lack of a minimum wage to impose on workers myriad forms of punitive wage deductions or wage penalties, which result in workers being paid nothing for the labor they have performed.

Low wages are a source of anger among workers and have been the subject of a wave of labor unrest since 2017, with over a dozen labor strikes recorded across a number of industries, including the garment sector.67 Starting on May 11, 2018, garment workers at the Bole Lemi Industrial Park went on strike for five days, demanding better working conditions and higher wages – a strike workers were able to launch despite the legal obstacles. Management of the factories allegedly responded that they would agree to salary increments if they saw an increase in worker productivity.68

RESTRICTIONS ON HUMAN RIGHTS ADVOCACY

As discussed above, the Ethiopian government severely restricts the ability of nongovernmental organizations to engage in human and labor rights advocacy. These restrictions have had the effect of shrinking Ethiopian civil society drastically and placing significant obstacles to labor rights monitoring and enforcement.

In 2009, the government adopted the Proclamation to Provide

(known as the Charities and Societies Proclamation or “CSP”). The CSP established draconian rules concerning the creation and operation of nongovernment organizations. Among numerous other measures, the law labels any nongovernmental organization that receives more than 10 percent of its funding from outside of the country as “foreign.” Such organizations are forbidden from engaging in advocacy related to human rights, gender equality, democratic governance, children’s rights, the rights of the disabled, and other issues.69

This restriction has effectively throttled the flow of funds to organizations working on these key issues. Because Ethiopia is one of the world’s poorest countries, there is little opportunity for domestic fundraising for the activities of nongovernmental organizations. At the time the law was enacted, for example,

Samuel Andreas Admasie, “Amid political recalibrations: Strike wave hits Ethiopia,” 21 Journal of Labor and Society, p.431, https://doi.org/10.1111/wusa.12350

All Africa, 19 May 2018, https://allafrica.com/stories/201805220677.html

See, e.g., Amnesty International, “Ethiopia: The 2009 Charities and Societies Proclamation,” 2012, https://www.amnesty.org/download/Documents/16000/afr250072012en.pdf

January 2009, https://www.hrw.org/news/2009/01/08/ethiopia-new-law-ratchets-repression

in jeopardy,” Press release, 1 September 2009, Africa/ethiopia/Ethiopia-Freedom-of-association-in

Mondiaal FNV, “Quick Scan Of The Linkages Between The Ethiopian Garment Industry And The Dutch Market,” 2017, p. 9, https://www.somo.nl/wp-content/uploads/2018/01/Quick-scan-Ethiopian-Garment-industry.pdf

As part of his promises towards openness and reform, Ethiopian Prime Minister Abiy Ahmed has committed to revisit this repressive law. In July 2018, the Federal

council to address the CSP among other repressive laws. The council held public

the CSP in November 2018. There is, however, skepticism on the part of human rights advocates as to whether the incremental improvements proposed in this

on Ethiopia’s New Draft NGO Law,” 29 November 2018, https://www.hrw.org/news/2018/11/29/joint-letter-ethiopias-new-draft-ngo-law.

67

68

69

70

71

72


70 The Charities and Societies Proclamation thus effectively cut off the only viable means of funding human rights advocacy in Ethiopia and barred

Watch and Amnesty International, from doing human rights work within the country.

The restrictions on NGOs have significant implications for code

and its affiliates, among other stakeholders. Because of these restrictions and other repression by the Ethiopian government, there are no local NGOs in Ethiopia that work on worker rights issues.7¹ In other countries, such organizations play a critical role in defending worker rights. Among other roles, NGOs serve as a critical conduit to the outside world by documenting labor abuses, assisting workers in filing complaints with international organizations, and engaging with international brands, thereby helping to hold employers and brands accountable to the law and to applicable private labor rights standards.

The Ethiopian government’s restrictions on civil society help to create an environment of impunity in which unscrupulous employers know that violations are less likely to come light.7² The Prime Minister’s recent reforms have not included the repeal of the CSP.


RESTRICTIONS ON FREEDOM OF ASSOCIATION

In addition to barring the sorts of nongovernmental organizations workers might turn to for advocacy, Ethiopian law also places significant restrictions on the ability of workers to organize trade unions and undertake collective activity to improve their working conditions, including severe restrictions on the right to strike.7³

The ability of garment and textile workers to improve conditions through organizing and collective bargaining is further hampered by restrictions on rights of association in other sectors. In most developing countries, the apparel and textile sectors tend to be among the least organized of major industries, and garment workers seeking to unionize often depend on the infrastructure and support of labor unions in other industries, including the public sector. In Ethiopia, however, the law prohibits union organization by workers in industries where labor tends to be strongest, including teachers and healthcare workers, as well as among private security workers, domestic workers, and seasonal and part-time agricultural workers. 74

Moreover, the government has the power to unilaterally cancel the registration of any trade union. Trade unions are prohibited from acting in a political manner and the law allows administrative authorities to appeal to the courts to cancel union registration for engaging in such activities.75 In the context of a highly repressive government, these authorities give labor unions significant cause to avoid attempting to rock the boat and demand legal reforms necessary to protect workers.

Labour Proclamation, Art. 158 (3).

Practices 2014: Ethiopia,” 25 June 2015, https://www.ecoi.net/local_link/306259/429638_en.html

Labour Proclamation, Art. 120. Union registrations may also be canceled if

or deceit, or where any objective of the organization is found to be illegal.

IndustriALL, “Ethiopian textile unions campaign to end poverty wages,” 10 May 2018, http://www.industriall-union.org/ethiopian-textile-unions-campaign-to-end-poverty-wages

73

74

75

76


Moreover, by prohibiting the operation of foreign-based NGOs and local NGOs that receive more than nominal international support, the Ethiopian government, through the CSP, effectively bans international labor organizations or labor-sponsored nongovernmental organizations from performing the sorts of capacity building work among textile and apparel worker unions that is common in many developing countries.

Despite these obstacles, the Confederation of Ethiopian Trade Unions (CETU) – to which the IndustriALL Global Union affiliate, the Industrial Federation of Textile, Leather and Garment Workers Union (IFTLGWU), is affiliated – has reported that it is doing significant new organizing of workers and have been leading a public effort to press for the establishment of a minimum wage.76


Methodology

The WRC gathered information concerning code of conduct compliance at the four apparel factories noted below through the following sources of evidence:

Initial and follow-up interviews with 45 currently employed garment workers (including at least 10 workers at each factory), amounting to approximately 80 interviews in total. The interviews were conducted during March and August 2017. All interviews were carried out offsite, in locations of workers’ choosing or by telephone, in the workers’ native languages of Tigrinya, Oromo, and Amharic. The workers interviewed ranged in age from 17 to 30 years, with half of the workers between 17 and 20 years old. All are women. Each worker occupied the position of sewing machine operator, cutter, or quality control auditor. The interviews were recorded and then translated and transcribed in English; interviewers made clear to interviewees that all content would be aggregated and anonymized, with workers’ names kept strictly confidential.

A review of factory documentation, shared by workers with

personnel policies, and factory identification cards. Additionally,

to verify complaints concerning nonpayment of wages,

daily record of hours worked over the course of a month, which could then be compared with the hours reflected in the employees’ pay stubs.

A review of applicable Ethiopian labor law, including relevant provisions of the country’s Constitution and Labour Proclamation No. 377/2003 (as amended) (herein, “Labour Proclamation”), as well as those conventions of the International Labour Organization that have been ratified by or are otherwise binding upon Ethiopia and applicable buyer codes of conduct.

It should be noted that, while consultation with unions, worker organizations, and civil society groups is generally a core

to conclude that seeking input or cooperation from the unions in the sector during the investigative phase of this engagement

unacceptable level of risk of reprisal. We are sharing our findings with the Confederation of Ethiopian Trade Unions (CETU) and the Industrial Federation of Textile, Leather and Garment Workers Union (IFTLGWU).

As noted, the statements in this report concerning working conditions in these factories reflect findings reached by the

evidence-gathering discussed above, which were conducted

evidence, however, that would suggest that conditions in any of these factories have changed materially since our investigation was conducted.

A review of secondary source materials concerning labor practices and human rights practices and the development of its apparel export sector in Ethiopia, including reports by Ethiopian government agencies and nongovernmental organizations as well as articles in the media.

A review of U.S. Customs shipping data on apparel goods imported into the United States from Ethiopia, of lists of supplier factories published voluntarily by brands, and of related material – for the purpose of identifying brands producing at the factories investigated.



Findings and Observations

A. FINDINGS ON WAGES

Ethiopia is an unusually challenging context in which to conduct worker interviews due to harsh restrictions on freedom of association, speech, and assembly – in particular, on the ability of non-governmental human rights organizations to function freely. The government’s history of employing repressive tactics against journalists and peaceful protesters also has an inevitable chilling effect on workers’ willingness to speak out about the labor conditions they are facing. This political landscape in Ethiopia also effectively prevented the WRC from performing onsite inspections of the facilities covered in this report.

Despite these limitations, the WRC was able to conduct significant fact finding, via offsite worker interviews, at four major apparel export factories. In this section, we present the findings of our field research, including the labor standard violations we documented in each factory investigated.

interviewed at all four factories, in order to determine wage

that workers’ base pay was as low as US$0.12 per hour, with workers sometimes taking home less than a dollar a day. The highest wages we found were a base wage of US$0.24 per hour, with peak take-home pay (including overtime, bonuses, other allowances, and payroll deductions) of US$2.52 per day. On average, the base wage paid at the four factories was US$0.18 per hour.

The figures to the right compare the lowest wage rates the

in these factories) with the legal minimum wage in other major garment exporting countries.77

HOURLY MINIMUM WAGE for garment workers by country compared to the lowest garment worker wage in Ethiopia (USD)

of pay stubs obtained for MAA, Arvind, and Jay Jay, as well as worker

JP, worker testimony at the facility was clear, credible, and consistent. The wage levels reported by JP workers are similar to the wage levels reflected

we used the minimum wage rates for export processing zones (http://www.trabajo.gob.hn/tabla-de-salario-minimo-2018/). For China, we used an average of the minimum wage rates for Beijing, Shanghai, Jiangsu Province, Zheijiang Province, and Guangdong Province, where China’s garment export industry is concentrated (http://www.mohrss.gov.cn/SYrlzyhshbzb/gongzishourufenpei/fwyd/201804/t20180404_291579.html). For India, we used the minimum wage rate for Karnataka State. For all other countries in

and reported by the relevant governmental authorities.

77

MONTHLY MINIMUM WAGE for garment workers by country compared to the lowest garment worker wage in Ethiopia (USD)

FIG. 2.B

FIG. 2.A

350

1.4

302

1.45

300

1.2

250

1.0

200

0.8

150

0.6

100

0.4

50

0.2

China

China

Hond

uras

Hond

uras

Camb

odia

Camb

odia

India

India

Pakis

tan

Pakis

tan

Bang

lades

h

Bang

lades

h

Burm

a

Burm

a

Ethiop

ia

Ethiop

ia

0

0

288

1.2

182

.88

113

.48

108

.46

94

.45

78

.38

25

.12



The ratio between wage levels in Ethiopia and Bangladesh is especially noteworthy. Bangladesh, a country with a cost of living comparable to Ethiopia’s,78 has been notorious for having the lowest wages among the large garment exporters. Bangladesh’s new legal minimum wage of US$0.48 per hour, which has been decried by union leaders in the country as a “joke” and a “slap in the face” and has drawn mass worker protest,79 is four times the actual minimum being paid to

These wage levels are not illegal, because employers are not constrained by any minimum wage law. Also, although many brands now officially embrace living wage as the proper wage standard for their supply chains, no major brand explicitly requires its suppliers to meet any specific wage standard except for minimum (or prevailing) wage. Thus, the extremely low wages being paid at Ethiopian suppliers do not violate the brands’ codes of conduct. (Other wage-related practices of these suppliers do violate brands’ codes, as discussed below.)

While exploiting wages as low as US$0.12 an hour, in a country where prices for consumer goods and services are roughly one-third of the level of the United States,80 may not put the brands in violation of their codes of conduct, it does place the actions of brands like PVH and H&M in abject contradiction of their claim to recognize living wage as a worker right and to be taking meaningful steps toward paying it.

Based in the northern Tigray province in the town of Mekelle, MAA Garment and Textiles (“MAA”) employed 1600 employees as of 2016.8¹ As one of Ethiopia’s 17 vertically integrated factories, the Ethiopian-owned facility has the capacity to weave and spin cotton products as well as assemble (cut, make, and trim) garments. Its output includes trousers, underwear, blouses, t-shirts, and home textiles.

According to U.S. Customs data,8² online sources, and worker interviews, the factory’s current and recent buyers have included H&M – for which customs data indicates the factory is the single largest source of apparel exported to the United States from Ethiopia – as well as Walmart (and its subsidiary Asda), Bonghwa, MOC, Edwards, Obermeyer, DVH Apparel, and Trimark Sportswear.

certified the facility with highest status of “platinum” through November 2020.8³

Findings & Observations:

B. FINDINGS BY FACTORY

See, The World Bank Data, “PPP conversion factor, GDP (LCU per international $)” https://data.worldbank.org/indicator/PA.NUS.PPP

Faisal Mahmud, “Protests over Bangladesh’s minimum wage for garment workers,” Asia Times, 17 September 2018, http://www.atimes.com/article/protests-over-bangladeshs-minimum-wage-for-garment-workers/

See, The World Bank Data, “PPP conversion factor, GDP (LCU per international $)” https://data.worldbank.org/indicator/PA.NUS.PPP

Mondiaal FNV, “Quick Scan Of The Linkages Between The Ethiopian Garment Industry And The Dutch Market,” 2017, p. 17, https://www.somo.nl/wp-content/uploads/2018/01/Quick-scan-Ethiopian-Garment-industry.pdf

This information was obtained from reviewing U.S. Customs records of apparel goods imported into the United States, accessed through the web-based service ImportGenius, https://www.importgenius.com/.

http://www.wrapcompliance.org/wrap-facilities-worldwide

must successfully pass every audit with no corrective actions or observations and

80

78

81

79

82

83

MAA Garment and Textiles, Kebire Enterprises Plc. (MAA)

MAA subjects workers to draconian wage deductions…ranging from

one to 10 days’ pay, often for minor infractions like arriving five minutes

late or “talking in hallways.”


Findings & Observations:MAA

Additional information concerning infractions and punishments has been communicated to workers verbally. For example, workers reported that they risked being fined a day’s wages if they were caught drinking water at their work station.

A production error can also result in the deduction of wages.

supervisor scolds me when I work too slow, but when I pick up

ruined some cloth. As a result, they fined me with a two-day wage cut. There really is no winning.” Workers also reported that requesting a day of leave, to which they have a legal right, can result in a large punitive wage deduction.

For example, Walmart’s Standards for Suppliers bars suppliers from “[making] illegal or excessive wage deductions” https://cdn.corporate.walmart.com/bc/8c/97ac8c9b43229f17480057fd684e/standards-for-suppliers-english-updated-6-30.pdf

Ethiopia Labour Proclamation Art. 59 (1) provides that “The employer shall not deduct from, attach or setoff the wages of the worker except where it is provided otherwise by law or collective agreement or work rules or in accordance with a court order or a written agreement of the worker,” with Art. 59 (2) specifying that “The amount in aggregate that may be deducted at any one time, from the worker’s wage shall in no case exceed one-third of his monthly wages.”

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85

Punitive deductions at MAA are sometimes arbitrary as well as excessive. One worker testified that she was fined a day’s pay for following a manager’s instruction to work in a different production line, because she failed to notify her supervisor of the other manager’s directive.

Under MAA’s Dickensian regime of wage penalties, a worker who, on a given day, has a passing chat with a friend in the hallway, makes the mistake of cooling herself in the factory’s reportedly sweltering conditions with a sip of water, and makes a small production error can be fined well over a week’s wages.

Notably, MAA’s wage deduction practices are so egregious, they violate even Ethiopia’s weak law concerning wage deductions, which allows any deduction that is part of a factory’s formal policy as long as it does not deprive workers of more than one-third of their monthly pay.85

Since a single peccadillo (talking, being five minutes late) at MAA can cost a worker 100 percent of that day’s pay – or far more – and MAA’s employee handbook does not set an upward limit on the amount of wage deductions a worker can accrue in a given month, the factory’s policies are, on their face, a violation of national law as well as buyer codes and international standards.

Workers also reported that managers frequently confiscate workers’ cell phones if they are caught using the phone during working hours and do not return such items for two or three days. Managers, reportedly, sometimes also cut workers’ headphones in half if they catch a worker using them. Seizing workers’ personal property and denying them access to it or destroying it is another form of financial penalty that violates applicable standards as well as a form of psychological harassment.

In violation of this standard, the MAA factory subjects workers to draconian wage deductions, including penalties ranging from one to 10 days’ pay, often for minor infractions,

These outsized punitive deductions are an officially codified policy of the factory, as reflected in MAA’s employee handbook, which sets forth the following schedule of offenses and penalties (with the particular penalty imposed in each case depending on the number of prior infractions):

“Leaving work station and moving around without permission [or] standing and talking in hallways”: one to five days’ wages;

Arriving “five to 30 minutes late without a sufficient reason”: one to three days’ wages;

“Being reckless with the factory’s property and causing repairable damage”: five to 10 days’ wages.

1. Wages and Hours

Punitive wage deductions are prohibited by most national laws, including Ethiopian law, as well as most brands’ codes of conduct. Indeed, applicable codes of conduct incorporate the specific rule that employers must not deprive workers of any substantial portion of their income through punitive wage deductions.84



Mandatory Overtime: In violation of domestic law and applicable codes of conduct requiring that overtime be voluntary,86 worker testimony indicates that MAA regularly obliges workers to perform overtime as a mandatory aspect of employment. The obligation to perform overtime is reinforced through another set of illegal wage deductions imposed on workers who decline to work beyond their regular shifts. One worker recalled being fined two days of pay, because she left at the end of her regular shift to attend a school class without permission. Another worker testified that her manager denied her a raise and told her explicitly that this was punishment because of her decision, several weeks earlier, not to perform overtime work. In general, workers at this facility reported that the penalty for refusing overtime is the loss of two to three days’ wages.

Evidence gathered shows that the factory’s practices with respect to overtime pay violate provisions of domestic law and applicable codes of conduct requiring that workers be paid, at a premium rate (125 percent of normal wages, under Ethiopian law),87 for all hours worked in excess of the regular work schedule.

These unlawful practices are, in part, codified in MAA’s official employee handbook, which stipulates that the first 20 minutes after regular shifts end do not count as overtime. Workers can thus be required to perform up to eight hours of unpaid labor, per month, by managerial edict.

Workers testified that the failure to pay workers properly for overtime hours extends beyond the 20 minutes per day of wage theft authorized by formal policy. After being informed of the

to keep careful records of their working hours for a month and share the data with us, which the workers agreed to do. We compared the records thus collected with the hours reported by management on workers’ official pay stubs for

by the workers). The data show that workers performed up to 56 hours of overtime work, over the course of the month, which was neither recorded on the pay stubs issued by management nor compensated in workers’ monthly wages. Workers indicated that they sometimes receive late “make-up” payments, long after the fact, for such uncompensated

for several months to quantify any further compensation. Some “make-up” pay was received by some of the workers, but in no case was it sufficient to compensate them for the total hours worked, even at regular pay levels, much less at the premium rate at which management is obligated to pay for overtime labor.

In addition, the payment practices reported by workers – payment made late and without adequate documentation of what payment corresponds to which hours worked – violate provisions concerning timeliness of pay and proper communication of payment calculations commonly found in buyer codes and the codes of buyer-backed monitoring entities – including, for example, the standards of Fair Labor Association – as well as the Labour Proclamation and the rules set forth by the MAA in its own handbook.88 MAA’s pay practices, in addition to their other illegal aspects, are not sufficiently clear, transparent, and well-documented to enable workers to know whether they are being paid the appropriate wages corresponding to their hours worked.

Ethiopia Labour Proclamation Art. 67 (1) provides that “A worker may not be compelled to work over-time,” while H&M’s Code of Conduct states “Overtime work must always be voluntary and compensated in accordance with the law.”

Labour Proclamation, Art. 68.

FLA Monitoring Guidance and Compliance Benchmarks, Section 9, C.4 states that

once a month”, while C.5 states that “All payments to workers, including hourly

and paid accurately.” See: code_and_benchmarks.pdf; The Labour Proclamation, Art. 58 states that: “Wages shall be paid at such intervals as are provided for by law or collective agreement or work rules or contract of employment.” The absence of a collective agreement and contract of employment implies that the MAA employee handbook is the controlling standard regarding the issue of timely payment. The MAA employee handbook states: “The employee has the right to get paid his salary and other legal payments on due time.”

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88My supervisor scolds me when I work too slow, but when I pick up the pace

it's hard to not make mistakes. One time I accidentally ruined some

cloth. As a result, they fined me with a two-day wage cut. There

really is no winning.”



Several workers at the MAA factory reported the existence of sexual coercion, in which managers use their power, over such issues as the granting of leave, in order to obtain sexual favors.

2. Harassment and Abuse

Applicable codes of conduct require that workers must be treated with dignity and respect, and that no worker shall be subjected to physical, sexual, psychological, or verbal harassment or abuse. Applicable codes of conduct also prohibit discrimination in employment on the basis of sex. The Labour Proclamation does not specifically prohibit sexual harassment but prohibits discrimination in employment on the basis of sex and requires generally that employers must “respect the workers’ human dignity.”89 Sexual harassment by employers is barred under Ethiopia’s Criminal Code, which makes the conduct punishable by imprisonment.90

of abuse and harassment in violation of domestic law, as well as applicable codes of conduct,91 including:

Workers reported that managers or supervisors addressed them with terms like “stupid” and “trash” and said they were “dumb,” “deaf,” and “worthless.”

Labour Proclamation Art. 12 (3).

Criminal Code Proclamation No. 414/2004, Art. 625.

H&M’s Code of Conduct, 4.1.3, provides that “Every employee shall be treated with respect and dignity. Under no circumstances do we accept the use by our suppliers, their subcontractors or other business partners of humiliating or corporal punishment, and no employee shall be subject to physical, sexual, psychological or verbal harassment or abuse.”

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"I have been asked out for a date or for sex by my supervisors. I know this has happened to other girls too. If we say yes, they will easily cooperate with us when we are late or ask for annual leave or other things, but if not, they will use what they can in their power to make us miserable. If we ask for annual leave they will hold our refusal to their sexual advances against us saying that ‘this all could be avoided.’"

It was also reported that women who agree to the managers’ requests are given favorable treatment, such as promotions.

Needless to say, sexual coercion of this sort is among the most serious violations an employer can commit. Because most instances of sexual harassment and coercion in the garment industry go unreported – due to embarrassment, fear of social stigma, fear of retaliation, and/or skepticism that lodging a complaint will lead to corrective action – the fact that multiple workers, among a modest interview sample,

several different managerial employees as perpetrators, indicates that the practice is not limited to a few incidents or a single manager but is extensive.

Ethiopian law does not specify the quantity or duration of breaks which must be provided to workers. However, the MAA employee handbook specifies that regular workers are entitled one unpaid meal period of one hour. Under Ethiopian law, such formalized work rules constitute binding contracts with workers. Workers, however, consistently reported that they were regularly required to work through part or all of their meal break in order to meet the company’s production demands. In testimony echoed by many workers interviewed, one woman stated,

is neither recorded nor compensated by management.


Discrimination due to pregnancy, while not specifically barred under Ethiopian law, is generally understood to be a form of unlawful sex discrimination9² and is prohibited by virtually all buyer labor codes.93 Several workers at the MAA factory reported that management has a practice of harassing women who become pregnant by accusing them of abusing pregnancy benefits, which, by law, include 90 days of paid maternity leave.94 Several workers testified that most women do not inform management of their pregnancies until they are visibly showing, because they are afraid managers will accuse them of becoming pregnant in order to get lighter work duties or other supposed benefits that come with pregnancy. As one worker put it, most women “wouldn’t dare to tell their supervisor, because they would be shouted at [and] accused of looking for ways to take rest.” The management attitude described creates a hostile environment that interferes with the ability of workers to freely access their statutory leave rights. Such harassment also suggests a high risk of discrimination in hiring, promotions, and

and other researchers have found at other facilities in the sector.95

Verbal Abuse: Applicable buyer codes’ provisions barring harassment extend to verbal abuse. Yet verbal abuse is a widespread problem at MAA, as fully half of the workers interviewed complained of such management conduct. Workers are typically subjected to such abuse when the managers find workers speaking to one another during work time, when they are dissatisfied with their pace of work or performance, or when they arrive late for work. Workers reported that managers and supervisors addressed them with terms like “stupid” and “trash” and said they were “dumb,” “deaf,” and “worthless.” A worker also related that managers yell at workers if the workers request a day of leave or make complaints about wages or working conditions.

See, for example, ILO Convention 183, which states that, “[e]ach Member shall adopt appropriate measures to ensure that maternity does not constitute a source of discrimination in employment” (Art. 9(1)). This convention has not yet been

H&M’s Code of Conduct, 4.1.5, states “No employee shall be discriminated against in employment or occupation on the grounds of sex, race, colour, age, pregnancy, sexual orientation, religion, political opinion, nationality, ethnic origin, disease or disability.”

Constitution of Ethiopia Art. 35 (5), Labour Proclamation, Art. 88.

See, Hagos, Tesay, “Ethiopia: Decent Working Condition for Women,” The Ethiopian Herald, 24 January 2017, https://allafrica.com/stories/201701240617.html

Labour Proclamation, Arts.12, 92.

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2. Occupational Health and Safety

Ethiopia’s Labour Proclamation provides generally that employers must ensure a safe and healthy work environment including: maintaining a work environment that does not cause danger to the health and safety of employees; providing appropriate guidance to employees to avoid injury or accidents; establishing health and safety committees; and providing appropriate protective equipment.96 Virtually all buyer codes also include a general standard requiring suppliers to protect worker health and safety.

onsite inspections at the four factories, a comprehensive assessment of occupational safety and health conditions was not possible. Far more than most other categories of labor rights compliance, occupational safety and health issues are difficult to measure through worker interviews

evidence on some health and safety issues at MAA to warrant findings.


MAA management responded to the prevalence of workers fainting by announcing new work rules, designed not to protect workers’ health and safety, but to punish workers who collapse and those who come to their aid.


Workers Collapsing Unconscious from an Apparent Combination of Heat, Overwork, and Insufficient Rest and Hydration: Of greatest concern, workers reported that, over their tenures at the factory, they have witnessed numerous incidents of employees fainting at their work stations. Workers’ testimony shows that this is a chronic problem at the factory. Workers collapsing unconscious at a garment factory, with such incidents occurring over an extended period of time, is evidence of a grossly unsafe workplace. The cause of chronic fainting among a manufacturing workforce is typically a combination of excessive workloads, insufficient rest, insufficient hydration, and high ambient temperatures, and there are references to all of these phenomena in worker

draw conclusions as to the exact combination of factors that is causing workers to collapse at MAA, though lack of access to drinking water is clearly one major factor (see below). Thus, while the presence of the problem is proof of unsafe conditions, further inquiry will be required to determine the nature and extent of the underlying factors.

Workers reported that management, as a matter of unofficial but standard practice, prohibits employees from obtaining drinking water except during the infrequent breaks the factory provides. One sewing machine operator, for example, stated that “they threaten to fire us if they catch us [drinking water at

that they could lose an entire day’s pay if they were caught drinking water outside of break time. Further, as noted above, workers complained that they were not always able to obtain water during their breaks because of the need to complete production quotas. The factory’s restrictions on access to water represent a serious threat to workers’ health and are a contributor to the high incidence of fainting discussed above.

Restricted Access to Restroom Facilities: Workers reported that, as with access to drinking water, MAA factory management enforces an informal rule that workers cannot use the restroom facilities except during breaks. Workers also reported that, as with access to drinking water, pressure to meet production quotas caused them to regularly work through their breaks, further limiting access to sanitation facilities and causing discomfort. Moreover, when they did use the restroom facilities during their breaks, long lines to use the facilities sometimes caused them to return late to their work stations, resulting in scolding from supervisors, thereby discouraging further their use of the facilities.97 Denying workers access to bathroom facilities places their health at risk, violating legal and buyer standards on health and safety, and also constitutes a form of psychological abuse.

and safety standards at MAA:

In mid-2017, according to workers, MAA management responded to the prevalence of workers fainting by announcing new work rules, designed not to protect workers’ health and safety, but to punish workers who collapse and those who come to their aid. Specifically, management decreed that anyone who faints at work will be fired, as will anyone who attempts to help the person. This approach derives from management’s explicitly stated opinion that any worker who appears to faint is faking illness in order to avoid work. This policy, in addition to its cru

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